Ais Final Cheat Sheet

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The Control Matrix A tool designed to assist in analyzing the effectiveness of controls, PCAOB Auditing Standard Number 5 – “Effectiveness of Control Design” Establishes the criteria to be used in evaluating the controls in a particular business process Steps in Preparing a Control Matrix STEP I: Specify control goals 1. Identify the Operations Process Control Goals -Effectiveness goals -Efficiency goals -Security goals 2. Identify Information Process Control Goals -Input Goals -Update Goals Operations Process Goals: For cash receipts process, two examples are: A:Timely deposit of checks B:Comply with compensating balance agreements with the depository bank -Other possible goals of a cash receipts would be shown as goals C, D, etc. and described at the bottom of the matrix (in the matrix legend) With respect to other business processes, such as production, possible effectiveness goals are: A:Maintain customer satisfaction by finishing orders on time B:Increase market share by ensuring the highest quality of goods Operations Process Goals: Efficiency Goals Ensure that all resources used throughout the business process are being employed in the most productive manner In general, people and computers should always be included in the efficiency assessments related to accounting information systems For other business processes, such as receiving goods and supplies, efficiency goals include the productive use of equipment Operations Process Goals: Security Goals Ensure that entity resources are protected from loss, destruction, disclosure, copying, sale, or other misuse Two resources of the cash receipts process over which security must be ensured are cash and information (accounts receivable master data) Information Process Goals: Input Goals Update Goals Ensure:Update completeness (UC) Update accuracy (UA) Steps in Preparing the Control Matrix STEP II: Identify recommend control plans 1. Annotate “Present” Control Plans 2. Evaluate “Present” Control Plans 3. Identify and Evaluate “Missing” Control Plans Systems flowchart:Manual And Automated Data Entry Available Control Plans for Data Input P-1: Document design P-2: Written approvals P-3: Preformatted screens P-4: Online prompting P-5: Populate input screen with master data P-6: Compare input data with master data Available Control Plans for Data Input P-7: Procedures for rejected Inputs P-8: Programmed edit checks P-9: Confirm input acceptance P-10: Automated data entry P-11: Enter data close to the originating source P-12: Digital signatures Batch Control Plans To be effective, batch control plans should ensure that: All documents are included in the batch-All batches are submitted for processing-All batches are accepted by the computer-All differences are disclosed, investigated and corrected on a timely basis-Batch control procedures start by grouping event data and calculating totals for the group Batch Control Plans-Dollar totals-Sum of dollar value of items in batch-By reducing the possibility that entire documents could be added to or lost from the batch or that dollar amounts were incorrectly input, this control improves input validity, completeness, and accuracy-Hash totals-Summation of any numeric data existing for all documents in the batch, such as a total of customer numbers or invoice numbers in the case of remittance advices-Hash totals are a powerful control, as they can determine if inputs have been altered, added, or deleted-Batch hash totals are, for a batch, similar to document/record hash totals for individual inputs Data Entry Batches Control Plans Present Controls P-1: Turnaround documents P-2: Manually reconcile batch totals P-3: Agree run-to-run totals (reconcile input and output batch totals) P-4: Review tickler file (file of pending shipments) P-5: One-for-one checking (compare picking tickets and packing slips) Missing Controls M-1: Sequence check M-2: Computer agreement of batch totals The Order Entry/Sales (OE/S) Process Introduction The order...
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